September was an extraordinarily difficult month for common stocks largely due to the festering and unresolved Greek debt crisis, fears of economic recession, European banking issues and plummeting investor psychology. This has resulted in a massive dash to liquidity, as panicky investors have rapidly exited common stock positions. Indeed, many small/medium capitalization, deep-value equities – the primary focus of our ABC Funds – have recently experienced significant share price declines.

At the present time, we believe equity markets are pricing in a significant economic recessionary environment. While we expect an eventual resolution of the European sovereign debt problem, the steep decent of the broader market has resulted in many equities trading at unusually low fundamental valuations. In fact, many common stocks are now trading at a significant discount to their book and net asset values, and historically low price to earnings and price to cash flow multiples. At current levels, we believe that our ABC Funds hold numerous common stocks that are trading at incredibly large discounts to their intrinsic worth.

Despite our disappointing performance in September and over the past six months, we are neither despairing nor pessimistic. While persistent negative and emotional news headlines are testing even the most patient investors, we are committed to our long-term investment style and believe that fundamentals will ultimately prevail. Unlike the global economic crisis that plagued the stock market in late 2008, it must be remembered that North American companies are in their best financial shape in decades. As a result, we strongly believe investors should retain their undervalued common stocks and ride out the frenzied storm.

In summary, despite the present chaotic conditions we remain disciplined, opportunistic, focused and fully-committed to our ABC Funds.

Irwin A. Michael, CFA